Cathay Pacific 2004 Annual Report Download - page 39

Download and view the complete annual report

Please find page 39 of the 2004 Cathay Pacific annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 77

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77

Cathay Pacific Airways Limited 2004 Annual Report 35
Principal Accounting Policies
(ii) unrealised differences on net investments in
foreign subsidiary and associated companies
(including intra-Group balances of an equity
nature) and related long-term liabilities are
taken directly to reserves.
5. FIXED ASSETS AND DEPRECIATION
Fixed assets are stated at cost less accumulated
depreciation and impairment.
Depreciation of fixed assets is calculated on
a straight line basis to write down cost over
anticipated useful lives to estimated residual
value as follows:
Passenger aircraft over 20 years to residual
value of between 0% to
10% of cost
Freighter aircraft over 20-27 years to
residual value of between
0% to 20% of cost
Other equipment over 3-7 years to nil
residual value
Leasehold land over the period of
and buildings the lease to nil residual
value
Major modifications to aircraft and reconfiguration
costs are capitalised as part of aircraft cost and
are depreciated over periods of up to 10 years.
The depreciation policy and the carrying amount
of fixed assets are reviewed annually taking into
consideration factors such as changes in fleet
composition, current and forecast market values
and technical factors which affect the life
expectancy of the assets. Any impairment in
value is recognised by writing down the carrying
amount to estimated recoverable amount which
is the higher of the value in use (the present
value of future cash flows) and the net
selling price.
6. LEASED ASSETS
Fixed assets held under lease agreements that
give rights equivalent to ownership are treated as
if they had been purchased outright at fair market
value and the corresponding liabilities to the
lessor, net of interest charges, are included as
obligations under finance leases.
Amounts payable in respect of finance leases
are apportioned between interest charges and
reductions of obligations based on the interest
rates implicit in the leases.
Operating lease payments and income are
charged and credited respectively to the profit
and loss account on a straight line basis over
the life of the related lease.
7. INTANGIBLE ASSETS
Intangible assets comprise goodwill and
expenditure on computer system development.
The accounting policy for goodwill is outlined
in accounting policy 2 on page 33.
Expenditure on computer system development
which gives rise to economic benefits is
capitalised as part of intangible assets and is
amortised on a straight line basis over its useful
life not exceeding a period of four years.
8. INVESTMENTS
Long-term investments are stated at fair value
and any change in fair value is recognised in the
investment revaluation reserve. On disposal or if
there is evidence that the investment is impaired,
the cumulative gain or loss on the investment is
transferred from the investment revaluation
reserve to the profit and loss account.